February 25, 2021

Which Firm Was the Biggest Loser In the Last Auditor Shuffle of 2020?

The fourth quarter of 2020 had some new winners and losers in the game of auditor musical chairs, as there were 16 new engagements and 41 client departures among the 12 major global and national audit firms between Oct. 1 and Dec. 31, according to Audit Analytics.

Of the top 12 firms, Deloitte gained the most new SEC audit clients with five while losing three for a net total of two. You probably have heard of two of the companies whose books will now be reviewed by Big D.

Accounting Today reported:

In terms of new market capitalization and new assets audited, and new audit fees, Deloitte topped the tables in the fourth quarter, largely due to two major new clients: food services and uniform provider Aramark, with an assist by Madison Square Garden Sports Corp., the holding company for a number of New York-area sports teams, including the New York Knicks and the Rangers (Deloitte also picked up related cable TV network MSG Networks Inc.). Aramark accounted for $6.69 billion of Deloitte’s $10.2 billion in new market cap, $15.7 billion of the firm’s $18.46 billion in new assets audited, and $7.23 million of its $11.18 million in new audit fees; Madison Square Garden Sports added $2.2 billion, $1.2 billion and $1.9 million in each area, respectively.

Deloitte stole both of those clients from KPMG, which had served as Aramark’s external auditor since 2002 and MSG Sports’ external auditor since 2015, according to both companies’ most recent 10-Ks.

Outside of the top 12 audit firms, the big winner was Baker Tilly, which scored 31 new SEC registrants as audit clients while losing two for a net total of 29, according to AT. The reason for that surplus was Baker Tilly’s merger with Squar Milner last November.

Friedman and BF Borgers had the second and third most new engagements during Q4 (each with six) but netted fewer SEC clients, according to Audit Analytics.

OK, now for the biggest losers in Q4. We mentioned KPMG earlier and it losing audit clients Aramark and MSG Sports to Deloitte. Well KPMG lost an additional three clients to Deloitte at the end of last year, plus one to PwC and one to a regional/local firm, with a net total of -6, according to Audit Analytics.

BDO had a pretty bad Q4, too, saying goodbye to six audit clients (including one to Deloitte, one to Grant Thornton, and one to Moss Adams) while winning one for a net total of -5.

But the firm that couldn’t stop bleeding SEC audit clients in Q4 was Marcum, which lost 16 while gaining zero new engagements for a -16 net total. Half of the clients that dumped Marcum went to Big 4 firms.

Here’s a chart from Audit Analytics showing all the client gains and losses in Q4:

Auditor Changes Roundup: Q4 2020 [Audit Analytics]
Baker Tilly tops Q4 SEC auditor engagements [Accounting Today]

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3 Comments

  1. How many of the clients lost are due to SPAC deals though? I am sure that makes up a good chunk of Marcum’s and KPMG’s losses?

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